Australia, China free up currency trading

Australia and China have agreed to make their currencies directly exchangeable in a deal that advances internationalization of the yuan and reduces costs for companies.

Australia's Prime Minister Julia Gilliard said Monday the Australian dollar will become only the third major currency to have direct convertibility with the yuan, after the U.S. dollar and Japanese yen. She announced the change in a speech in Shanghai, a transcript of which was posted on her official website.

Direct convertibility eliminates the need to exchange Australian dollars for U.S. dollars in order to buy yuan and vice versa.

Beijing wants the yuan to become an international currency but progress has been slow because of China's currency controls.

The move is a boost for Australian companies as China is Australia's biggest export market.